The Game's Not Over Yet
Chelsey is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Barnes & Noble Inc. (NYSE: BKS), the world's largest book seller, posted fourth quarter losses and revenue well below projections recently, begging the question: what exactly is the future of paper books in this increasingly technology-driven world?
As a journalist, it’s a topic that is constantly in the back of my mind and at the forefront of my daily conversations. When people can get their news through an iPhone app and their Hunger Games on a Kindle, how long will companies continue to make paper products?
For Barnes & Nobles, this reality has become all too…well, real. The Fortune 500 company's stock has dropped by 25% in the last year, closing at $14.63 today, as it struggles to compete with e-book and e-reader retailers like Amazon (NASDAQ: AMZN) and Apple (NASDAQ: AAPL).
But all hope is not lost for Barnes & Noble. The company is clearly making moves to ensure they don’t meet the same fate as some of its competitors. The company, which recorded $1.38 billion in revenue and $57.7 million in losses, is making its e-reader, Nook, a major priority.
The earnings report disclosed information on Newco — a separate division created on April 30 to handle Nook sales and its college bookstores division. The filing also detailed the company’s plans to focus on digital-centered projects and launch a new partnership with Microsoft (NASDAQ: MSFT).
Borders, which was once Barnes & Noble's biggest competitor, filed for Chapter 11 bankruptcy in February 2011 after failing to adapt to this reality. The company is currently being liquidated, giving Barnes & Noble the opportunity to take what was once Border’s share of the market.
Barnes & Nobles is, funny enough, in the same position they put small, local bookstores in years ago. They are facing a changing market defined by an insatiable thirst for technology, and they can no longer provide customers with the products and variety they want at the lowest cost.
But just as many of those small book shops have survived because of a population that prefers the charm of local bookstores, Barnes & Noble will likely always have a loyal group of customers who, like me, prefer the folded-down corners and actual pages of a book.
So is it a stock that will make you loads of money by next summer? Probably not. But as essentially the only major (print) book store left and one making strides to adapt to the e-reader craze, it is one that I believe will remain relatively stable for years to come.
Fool blogger Chelsey Dulaney does not own shares in any of the companies mentioned in this entry. The Motley Fool owns shares of Apple, Amazon.com, and Microsoft. Motley Fool newsletter services recommend Amazon.com, Apple, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.
